Emphasis on departmental efficiency by a firm:
A)causes non-bottleneck departments to over-produce and build work-in-process inventories.
B)eliminates wasteful activities involved in production as end product is produced in batches.
C)is a critical component of a lean accounting system.
D)motivates managers to reduce inventories.

Question

Quizplus · Accepted Answer

Emphasizing departmental efficiency often leads to non-bottleneck departments producing more than is needed by the next process, causing an increase in work-in-process inventories. This is because each department focuses on maximizing its own output without necessarily considering the overall flow and demand of the production process.

Emphasis on Departmental Efficiency by a Firm